tv [untitled] April 3, 2011 8:00am-8:30am PDT
do many things we could not do with normal zoning. this is an extremely important point. development agreements run with the land. they are not attached to a particular owner, bank, or financing company. this will stay with the 152 acres that make up the project site unless and until this board either terminate the agreement or agrees to modify it. that is incredibly important. i have heard a lot of concern about what happens if this developer goes away or goes bankrupt. this agreement we negotiated will run with whoever owns the land. we have also negotiated pretty extensive transfer agreements and that may clear that even if this master developer is here for the next 30 years, if they transfer any parcels the rights and obligations go with those parcels. there are extensive protections. in sum, the development agreement is a miniature
constitution for governing development in the next 30 years of this person. everything that happens in this happens under the framework of rules set up in this development agreement. with that, i am going to focus on the economic analysis which conducted. these are the highlights. this document has been posted on the planning department website for some time. it is a public document. any member of the board can download it. we published it many months ago. there may be one final update before this appears before the board in may. but everything i am citing here is presented in much greater detail on line. simply put, we have estimated this development agreement achieves $500 million of net additional public benefits. these constitute about $200 million in capital improvements, many of those things that josh
was pointing out about infrastructure improvements. all of these add up to a pretty considerable sum. second, this commits the master developer and eventually the master hoa to permanent maintenance of pretty much all the improvements on the site except for the streets. all the parks, sidewalks, storm water system, transit plazas -- all these will be maintained in perpetuity by the developer at no expense to the city and county. we anticipate these costs will amount to approximately $156 million of benefits to the city and people of san francisco. we have done our best to estimate what the value of the permanent rent control replacement units are to the city. we have come up with a complex formula in the analysis. what we did was essentially look at what the rents would be if there was not meant control into
the future and then look at what we expect the rents to be with rent control. this amounts to approximately 2 $160 million of public benefit. -- to $160 million of public benefit. that is in addition to our existing code and the requirements. to underline that point, the project would have to comply with inclusion very housing requirements as they stand today. we have gone the project's sponsor to commit to doing at least a third of those requirements on site. that is a firm commitment in the agreement that represents about 271 new affordable units within the project boundaries. in addition, if the project sponsor was to pay fees, that would amount to a sum of approximately $229 million that would be flowing toward affordable housing.
i would like to point out that is bigger than the bond we tried to pass several years ago and represents a significant sum for affordable housing construction. from the fiscal and economic impact perspective, this office worked with the budget office, the comptroller's office, to look at how this would affect the city's health. we expect the city to have approximately $17.50 million net fiscal surplus after the project is built up. this is after we met out all the additional costs of the growth and density of population. that represents a significant increase to the general fund. all of you are dealing with budget cuts right now. this project is a major economic driver for the city. there is also approximately $13
million to $16 million in general fund revenue for the construction years, on top of let me just ask a question, because this is not a new chart. this has been one thing that has been confusing me, if you can clarify. one-time annual, that seems to be a contradiction. it is one time, 20 years, and then that revenue stops, and we shift to 17. whatever in perpetuity after that? in that the way to look at it? >> this is from the construction period, and by one time, i should clarify that, it means during the construction period. the annual benefit to the city goes away.
the 17.5 is the maximum fiscal surplus at buildout. at the same time, we are getting dollars for the general fund. there is also growing general surplus. so i will try to -- thanks for pointing that out. sometimes i do not know if i am communicating well enough. finally, there is also a net positive impact on the sf mta, both during construction and during the buildout. there are those costs in the fiscal analysis that we were dealt extensively with the finance staff, the mta, and others. finally, the economic impact. the first section was focusing on the general fund. the second section is speaking broadly on the general impacts for the city. this is also a $7 billion project.
this would over the life of the project support almost 35,000 construction jobs, and that is a pretty significant economic stimulus in the city a time when we are suffering record unin play. of course, this would be over 20 to 30 years. and then, finally, note we anticipate once construction is complete that there'd be a permanent $300 million annually of economic activity generated for business, retail, and the employees, and that would support about 1600 permanent jobs. i am moving on, and i apologize we are going so quickly. a lot of questions yet been raised about the phasing of this project. there are four levels of the
approvals that this creates. the force level we call basic, and that is the actual approval, what accompanies the special use district. these have to be approved first, and as i mentioned earlier, -- the second level, and this is extremely important, the development phase. this is development approved by the board. this developer or any future developer would have to come back to san francisco for subsequent development phase approvals before they can build a single structure, so the development agreement is just the first phase. there is a public process that must be publicly advertised and posted. i just want to emphasize the d.a. did not authorize any building to be built. there are a series of subsequent approval. the third level down after you go to the development phase is a
design review and approval. earlier, a section 329 process was referred to. what we have done is a discretionary review process, so every building and community improvement in the project has to undergo a designing review process with the planning department and in some cases the planning commission. and at the most detailed level is implementing. every improvement has to get the conventional building permits, st. use permits, and any city permits that would otherwise be required of any other project anywhere else in the city, and i want to emphasize that, because there was some concern we're giving away our discretionary authority. in fact, there are actually multiple layers of approvals. the important thing about the way facing has been developed. this is increasing like a better
neighborhoods plan. . the advance notice in in an orderly buildout. why do i say that? this is the scale of a neighborhood. we are essentially looking at a better neighborhood plan. but it is important to note, like those areas, there is no public land taxes or funds being expended. this is not like candlestick or the shipyard which are truly public-private projects. what does this mean? this means we do not have the same amount of control necessarily on how this evolves. without us having a stake in it, it is hard for us to dictate. so we let the developer respond to market demands, and when there is an opportunity to build, they can build in a set of rules. as i mentioned before, they must
get development phase approval. that is up to a minimum of 500 units and a maximum of 2500 units. so put it another way, if the fewest is 3, and the most is, i think, about 12, so the project will be broken up into larger small pieces, and each development phase approval has to specify specific development, block by block, and then, finally, and most importantly, the delivery of the public benefits must conform to the development phase in plan, which is in the agreement, and there are triggers for thresholds. that is specific intersections, public improvements. they must be implemented. no further permits can be initiated until the specific thrust roles are met.
the specific -- >> -- no further permits can be initiated until the thresholds are met. there is a very detailed urban design criteria as set forth in the design standards document. that summarizes phasing. we're now going to talk about the replacement unit program. when control is prohibited in new housing. specifically, units occupied after 1985. it is important to note though that this law has an expressed exception. this is not something that is implied. it is not a waiver. it is an expressed exception in the law that allows new units to
be regulated using rent- controlled. -- rent control. this is in 4.3 of the government code. i want to emphasize, this does not mean that a project has to apply for a density bonus. it means that those forms of assistance that one may receive are specified in that statute. what do those include? they include things like density bonuses, so increases in housing density, and a whole range of concessions. the benefits in the agreement and the special use districts provide such. these forms of assistance are outlined in section 4.1, for those of you who are interested. i have listed some of them on
the sly. there are more than what is listed here. these are the highlights, the elimination of maximum density requirements. setback. increased height envelops. elimination " requirements for buildings exceeding 40 feet. more commercial in misuse, conveyance of some city property in the forms of street that are abandoned to create new streets or to create parks, and finally, substantial benefits, all of which are land use benefits that are alluded to in the section in the density bonus law. chapter 4.3. a couple other important details, and is probably bears repeating. no existing rent-controlled
units will be demolished under this agreement until a corresponding replacement unit is ready for occupancy, so this is an extremely important point. there has been unfortunate in the public some misinformation. if -- they cannot demolished a spot without having it please ready for occupancy. what does this mean? we do not ask for any existing tenants to move off of the site, to leave the site, to be relocated. tenants are allowed to move into a new replacement unit before their unit can be vacated and demolished. that unit, under the development agreement, they have to be provided with the exact same bedroom and bathroom count, a similar size for a. to storage area. exact terms, including rent, new and old pastors purgative, so
this point bears repeating. there are no new passthroughs allowed for the new project. new amenities are added to the units, including washers, dryers, dishwashers. there are the same parking rights and went afforded to those existing tenants who have parking rights in iran. they are afforded the same parking rights and went. it is not the same, but they are allowed to petition the rent board if they feel about the location of their partrepresents in it -- represents a reduction in housing services, so that is an important point. the units are allocated based on seniority or rather length of tenure at the project, some tenants are allowed to pick up their own unit, although it is based on how long they have been in their unit. finally, patio's and balconies are not guaranteed, but a tenant
may also petitioned the rent board for a reduction in services if they feel this represents a reduction in housing services. this next section goes over the noticing process. supervisor mar: ;mr. yarne, can you explain this? >> yes, and a lot is what not to do. i think an important theme is, we have heard in public comment, that the embassy suites opened the city up to risk, and we feel
is the opposite. they let us know what not to do, and what not to do is to not clarified in the agreement you have with the developer, so in this case, like i said, we are offering specific concessions, the density bonuses, the height and bulk changes, and so it is a contract between the city and the developer for mutual benefit, in what palmer pointed out is it was not clear in that case what the developer was getting for those restrictions on their inclusionary rent control units, so we essentially learned from that. it is the same strategy we're using, by the way, for all of our inclusionary rental units in the city of san francisco today. we're using the development agreement process, and we are offering a specific exceptions
or incentives, so again, i think the polymer case is important to emphasize. it points out what not to do. in a way, it was actually very helpful for allowing us to design something that will withstand legal challenge. i mentioned to embassy suites. again, the city attorney is not here today. at teacher hearings, perhaps they can comment on least some of this. embassy suites was another case where a local jurisdiction, i think santa monica, where light on a general waver. and i want to emphasize the korea also not relying on a general waiver here. we are relying specifically on the exception that is expressed. i think that is an important point. that case gave us a sort of road map on how to create a more sensible agreement.
so there is a multi faced process, and i apologize if it takes a long time to go through, but i think it is important. at the top of the slide, at a minimum two year notice, and this is a shortlist period of time that a tenant would have under this agreement before they're required to either take relocation benefits or to accept a replacement unit and moved out. and it begins with the approval of the development phase. this agreement requires the developer to make a public presentation to all tenants when the development phase is approved. remember, what that is is a road map, literally showing which blocks will be redeveloped, the order of development, and so every tenant durable development
will know which blocks are slated to be incrementally be developed first in which will come last. that is the first step in the process, and based on the length of time for approvals, it is hard to imagine a tenant would have less than two years. in many cases, they will have two, three, four, maybe five years. secondly, a tenant relocation plan also has to be approved by the planning director and the executive director of the rent board. that will specify which existing housing units are affected and which replacement units will be offered, and as a said, it will include a site plan, floor plan, the names, addresses, of additional occupancy, and an estimated schedule for relocation. this happens again at the beginning of the process coat before that is even under construction.
next, an existing tender notice. this is after the first notices. and existing tenant notice is delivered to any occupant within 60 days of start of construction of any replacement building. fourth, within six months of completion of the replacement building, so now, remember, we have the development phase. korea but the relocation plan notice. we have had a notice that you're a potential tenant before construction starts, and finally, while the construction is proceeding, the developer is required to give all tenants notice that there are replacement is available, and by the way, all copies of these notices are also required to go to the rent board. essentially, what that notice says is, hey, you have the right to relocate into a replacement unit.
they give an anticipated relocation date, the numerical seniority of the tenants, so they know how they rank and how long. for plans and an opportunity to visit sample units, and i want to emphasize that if at some point, and existing tenant decide they do not want an existing unit, they have the right to take full relocation benefits under the ordinance and essentially take that-benefit and move somewhere else that they wish. finally, the senate must respond after they have toward the units and seen the four plan. they are required to list their preferences to the developer. the developer then goes through a lottery essentially based on seniority and assigns the replacement units, and then they will sign a note -- send a notice to each tenant telling them which unit based on the lottery they have been allocated, and if the tenant
accepts that unit. by the way, at the time, the tenant can still say they do not wanted in can take leave. finally, when the unit is ready, and they agree to occupy, there is a notice that the unit is ready, and then the tenant is required to move within 30 to 60 days from the date of that notice. the developer is required to pay all the costs of that move. next, tenants may stay in their existing units after the replacement unit availability notice under the original lease terms and subject to rent control for as long as that building is worked. if they say they do not like the replacement unit, but i would like to stay for as long as possible, this agreement gives them the right to stay as long as possible until they voluntarily leave and take their relocation benefits, or the developer stops leasing all of
the other leases in the building and it is time to demolish the building. the developer may leaseback units that have been relocated. they are allowed to lease back those limit -- those tenants. these are not deregulated up until that building is ultimately demolished. so just to emphasize, what that means, at any given time, there can never be less than the existing number of rent- controlled units there are today, over 3000 units. there may impracticality be more than the 3002 under and 21 at any given point in buildout in case you have to build the replacement unit for the replacement buildings before you can remove tenants from the existing buildings, so in all likelihood, there will be more rental control units on park merced then there exists today
-- than there exist today. and a tenant can apply for a rent reduction. this is due to construction. if they feel that it is excessive that represents a diminution of housing services, they can petition the rent board and seek either a reduction in rent, or other remedies. finally, and i think this is my last slide, and, again, i appreciate your patience, supervisors. i want to speak -- speak briefly on it. city attorney charles sullivan is the primary director, he is actually at jury duty, and the other attorney who has been primarily guiding this effort is also unavailable, but they will hopefully be available at future hearings. it is the city attorney's
opinion that the state relocation law does not apply to the parker said projects. we have obviously looked at this issue extensively, and we believe based on the state relocation law that because this is a private project that the state law would not apply. however or regardless, we have gone ahead in the development agreement and made it abundantly clear in section 2.7 that we require the developer to comply with any fate -- any state or federal law that would otherwise apply, and we require the developer to change things if we are mistaken in our judgment. we cannot be more expressive than that. we have been looking into state relocation law and have been consulting with a state relocation law specialist the manages projects all over the state, and it is interesting to note that on the whole, this agreement provides better
protections for tenants that are globally would be provided under state relocation law. -- that arguably would be provided. there are things not offered under state law. this is a permanent rate controls subsidy that we are offering, not as relocating tenants, and all of the replacement units. this is not something the relocation law would require. in fact, all it would require is a rent subsidy lasting approximately four years, and then when you are done with those of 41 years, the unit that attended goes into is effectively allowed to go back to market rent, so in many respects, guaranteeing rent- controlled is a much better provision for the tenants, and then finally, and i have gone over this, and there are many
more amenities than would be required under state relocation law. i am more than happy with the city attorney is available, as well, to brief all of you further on this subject and it these are just the very high level observations we have made on this issue. i am available for comment. i would prefer that we also talk about it when the city attorney is also available, and that is it for my presentation. supervisor mar: colleagues, any questions? supervisor wiener? supervisor wiener: let's say a subsequent owner does not want subsequent owner does not want to honor the rent-controlled,